Published: August 26, 2008 11:34 pm            

Judge tells Cambria County controller to move funds to cover bills

EBENSBURG — Judge Gerard Long ordered the county controller Tuesday to transfer $3.5 million to the county’s general fund from the MHMR account, ruling that the borrowing procedure by the commissioners is legal.

Controller Ed Cernic Jr. was out of town Tuesday, but Toni Sherry, his first deputy, said no appeal is planned.

“The check already is cut and is being processed,” she said at noontime.

The transfer assures the county that it will be able on Friday to meet its $1.6 million payroll

– and other outstanding bills and obligations.

The $3.5 million will be repaid to the Mental Health and Mental Retardation agency account with interest by Dec. 31, the commissioners have said.

“I’m not surprised (by the ruling),” said President Commissioner P.J. Stevens, who was the controller before being elected five years ago as commissioner.

“It’s a long-standing common practice within county governments.”

The ruling, Stevens said, shows the controller “doesn’t have the statutory authority to prevent transactions such as this.”

The commissioners turned to the court to resolve the issue after Cernic refused last week to transfer the money.

Cernic had raised questions about the county’s financial stability. But his solicitor, attorney John Kuzmiak, argued Monday only that the commissioners had to make the transfers by resolutions rather than by a letter to the controller.

But Long disagreed.

“The use of a written directive as a public document is appropriate and makes the transfer transparent,” the judge said.

“This is not a change in budget, but rather just a temporary transfer to facilitate the operations of the county government.”

Stevens suggested Cernic’s stand was “grandstanding at the expense of employees, vendors and Laurel Crest.”

For three years, Cernic has issued memos to the commissioners projecting that the county would end each year with a $2 million deficit, Stevens said.

“Our audits did not bear that out. We’ve come out in the black every year despite these warning cries,” Stevens said.

He said the temporary transfer of money was necessary because of low cash flow.

Cambria’s general fund is to be repaid $9 million in temporary loans that were made to several county agencies as they await state reimbursements, Stevens said.

He said Cambria’s general fund budget is “on track” with its revenues and spending for 2008, although Laurel Crest – which is under a separate account – has had a cash-flow deficit.

Loans have been made to the nursing home because “bills have to be paid,” he said.

Laurel Crest has estimated its losses this year at $1.9 million. That would be down from the

$3.7 million last year.

The 2008 losses would be covered under the county’s $2 million unreserved fund balance, officials said.

        

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